iPhone 16 Is Unveiled, But Can It Really Spark a New Growth Cycle For iPhone Sales?

On Monday, Apple held its annual events for new products, where new iPhone, AirPods, and  Apple Watch were introduced.

Undoubtedly, the most significant product in this launch event was the iPhone 16 series: the entire series of iPhones supports Apple Intelligence, with the first batch of advanced AI functions expected to be available next month.

So, can this AI-capable iPhone help Apple start a new growth cycle? Although Wall Street analysts still have some doubts about the prospects of its AI capabilities, considering the huge demand for iPhone upgrades, the overall outlook for iPhone 16 sales is still quite optimistic.

What is The Future of Apple's AI capabilities?

Mark Vena, CEO and chief analyst at SmartTech Research, said that to win over customers, Apple needs to convince the public that AI capabilities on smartphones are more than just a trend.

He stated, Consumers may be still somewhat resistant due to the privacy and confidentiality hurdles that need to be overcome to fully take advantage of the AI benefits in the new iPhones, but I sense that because Apple has historic brand trust with consumers, the momentum will quickly build.

According to Apple's official introduction, its AI function, Apple Intelligence, is set to be released next month with iOS 18.1, iPadOS 18.1, and macOS Sequoia 15.1. Currently, Apple Intelligence only supports American English, with plans to support Chinese, French, Japanese, Spanish, and other languages next year.

Ben Bajarin, CEO and chief analyst at Creative Strategies, said that the AI capabilities of the iPhone 16 may help increase interest in new products, but the delay in some features may mean that more people will wait to see these features online (before considering a purchase).

Bajarin added, I do think the jury is out as to whether this iPhone cycle can drive a stronger-than-usual cycle, but I think there is good reason to believe the aging base, along with very aggressive carrier promotions, should see a good portion of their base to upgrade given a huge portion of the base is on 3.5+ yr old phones.

The Upgrade Demand Is huge

Dan Ives, a well-known Apple bull and analyst at Wedbush, spared no effort in praising the iPhone 16 in his report. He wrote in the report that preliminary supply chain checks for the iPhone 16 indicate that sales are much stronger compared to last year's models.

He estimates that the initial shipment volume may exceed 90 million units, higher than the 80 to 84 million expected by Wall Street.

We are continuing to see further indications across the Asia supply chain that this iPhone upgrade cycle could be a historical one setting the stage for a super-cycle as currently we estimate roughly 300 million iPhones globally have not upgraded in over 4 years.

Ives rated Apple as outperforming the market and set a target price of $285 per share. As of Monday's closing, Apple's stock price was reported at $220.91, which means he expects Apple to have nearly a 30% increase potential.